What is an income tax calculator?

An income tax calculator is an online tool that helps to calculate taxes which one is liable to pay under the old and new tax regimes. The calculator needs the necessary information, such as annual salary, rent paid, tuition fees, interest on a child's education loan and other savings, to calculate an individual's tax liability. 

This calculator gives you the total tax payable under the old and new schemes. It also suggests investment opportunities for the individual based on tax liability. This online tax calculator is a convenient tool, and you can also understand it simply so that anyone can calculate their tax liability.

How can you calculate your income tax?

You can use allcalculator.net's income tax calculator to estimate your total taxable income to determine which tax regime you should use. Some of the steps for the income tax calculation formula as per the old income tax slab are shown below:

• Calculate the gross taxable income
• Calculate the total tax benefits
• Calculate the net taxable income
• Calculate the total tax liability

How do you calculate the tax payable?

You can calculate the tax payable by applying the income tax slab rate of the net taxable income.

• First, calculate the gross income under all five heads of income: salary, house property, capital gains, business or profession and other sources.
• Calculate the total deductions available.
• Deduct the deductions from the gross income, which will be your net taxable income.
• Apply the income slab rate to the net taxable income and calculate the total tax payable.
• Calculate the total taxes paid during the financial year through TDS, advance, and self-assessment taxes.
• Deduct taxes paid from the tax payable will be the net tax payable for the financial year.

What are the other taxable incomes?

A list of other taxable income is as follows:

• Interest income
• Short-term capital gains/losses
• Long-term capital gains/losses
• Ordinary dividends
• Qualified dividends
• Passive incomes

Are there any types of deductions available?

Tax deductions arise from expenses which have two types, namely:

• Above-the-line-deduction
• Below-the-line-deduction

MAGI, Modified Adjusted Gross Income, determines whether a taxpayer qualifies for certain tax deductions. Some of the MAGI deductions are student loan interest, tuition and fees deduction, passive loss or passive income, rental losses, qualified tuition expenses etc.